Maitland/AMO Morning Monitor – 20 September 2018
What really matters... COVID-19
The FTSE is expected to open up. The German DAX and French CAC both opened up.
Asian markets continued to remain buoyant following optimism that China and America will eventually resolve their trade conflict.
Stock market moves
In other news
- Costs rise due to a weaker pound as inflation defies forecasts
- Rail failings underlined by timetabling fiasco
- Chair of Royal Mail leaves after two months
Corporate announcements* Maitland Client
British American Tobacco PLC Directorate Change
- The company announces that its CEO, Nicandro Durante, is due to retire on 1 April 2019.
- Mr Durante has been at the company for nearly 37 years.
- Richard Burrows, Chairman, said: “Nicandro has been an outstanding Chief Executive. He was the architect of the current strategy to transform the business and, with the successful establishment of BAT’s potentially reduced risk products business and the acquisition of Reynolds American Inc., he has created a stronger, truly global tobacco and nicotine business. Through this period of great change, Nicandro has substantially grown the business, delivering consistent strong growth in both earnings and dividends during his tenure.
- Nicandro Durante said: “It has been a privilege to have led such a great company for the last eight years. We now have a growing potentially reduced risk product business fully embedded in our organisation and the integration of Reynolds has been successfully completed. I shall stay in place for the next six months to ensure an orderly handover to my successor.”
- Based on current exchange rates, the company expects exchange to have a negative impact on net sales of £175m.
- Based on current exchange rates, the company expects exchange to have a negative impact on operating profit of £45m for the fiscal year.
- Ivan Menezes, CEO, said: “The year has started well and performance is in line with our expectations. We continue to execute our strategy with discipline and agility and despite seeing increased volatility in some markets we continue to expect organic net sales growth in F19 to be broadly in line with last fiscal year and consistent with our medium-term guidance of mid-single digit growth.”
- The company has appointed James Quin as Group CFO and Executive Director with effect from 1 January 2019.
- Mr Quin joins the company from Zurich Insurance Group where he was UK CFO spanning the UK Property & Casualty and Life Insurance operations.
- Commenting on the appointment, Lance Batchelor, Group CEO, said: “I am delighted to have recruited someone of James’s experience and calibre as CFO. He has extensive strategic, investor and operational finance experience within the Insurance industry and will be a valuable member of the leadership team as we target investment in new customer acquisition to deliver long term value for the Group.”
- Underlying revenue up 5% to £4.5bn (2017: £4.3bn).
- Underlying profit before tax up 9% at £137m (2017: £126m).
- Construction and Services order book of £10.2bn.
- Haydn Mursell, CEO, said: “I am pleased to report a good set of results with all divisions performing well. We have launched the Future Proofing Kier programme which will streamline the business thereby enabling us to deliver a more efficient service to clients, respond to changes in our markets and capitalise on growth opportunities, whilst, importantly, also accelerating the reduction of the Group’s net debt position.”
- £27.5 million net cash realised in sales from non-operating assets.
- Aviation: Passenger numbers at London Southend Airport up by 37%; Ryanair flights starting in Spring 2019 and the easyJet partnership will drive further growth, with an additional aircraft added this summer.
- Energy: Growth of processed tonnages sold up circa 50%.
- Warwick Brady, CEO, said: “We are reviewing all aspects of the Group to ensure we are well placed to deliver the ambitious growth targets set by the Board to double the value of the business. We are confident that we can meet our commitment to shareholders to unify the business and provide the framework for the delivery of the Company’s strategy to the benefit of all stakeholders.”
- Group revenue down 5% at £128.9m (2017: £135.2m).
- Number of clients up 3% to 129,000.
- The Group’s German subsidiary has received a licence in principle to offer financial services to EU clients.
- NAV total return of 3.9% – robust return, driven by capital value growth and achieved with limited gearing of 11.9%.
- Share price total return of 1.4% which compares favourably to FTSE All-Share REIT Index total return of 1.3%.
- Portfolio value has grown to £1.4bn.
- Andrew Wilson, Chairman, said: “Our strategy to grow and recycle capital into a diverse commercial portfolio producing sustainable, high quality rental income has continued to yield sound results in what has been another active period for the Company. The successful conversion to a REIT at the start of July is an important milestone for the business, making it one of the larger diversified REITs in the sector. With a high quality portfolio of assets located throughout the UK, a strong balance sheet and the lowest gearing amongst the Company’s peer group, UKCP REIT is well positioned to add value to its property portfolio and enhance returns for its shareholders.”